La Jolla, CA—Southern California home sales rose above the year-ago level for the seventh consecutive month in July despite continued declines in low-end distress sales. Increased activity in move-up and high-end submarkets also contributed to a significant rise in the region’s median sale price, which neared a four-year high, a real estate information service reported.

The median price paid for a home in the six-county Southland rose to $306,000 last month, up 2.0 percent from $300,000 in June and up 8.1 percent from $283,000 in July 2011, according to San Diego-based DataQuick.

July’s median was the highest since the median was $308,500 in September 2008. The median has risen month-to-month for six consecutive months and has increased year-over-year for the past four. July’s 8.1 percent annual gain was the highest for any month since July 2010, when the median rose 10.1 percent.

Greater demand, partially triggered by historically low mortgage rates, and a thinner inventory of homes for sale help explain recent gains in the median price. But the increases also stem from a sharp drop in foreclosure resales, which often sell at a steep discount and are concentrated in lower-cost areas, as well as a substantial increase in the portion of sales in mid- to high-end neighborhoods.

It appears that about half of the 8.1 percent year-over-year gain in July’s median sale price can be attributed to the shift in market mix. In July, price levels for the lowest-cost third of Southern California’s housing stock rose 4.9 percent year-over-year, while they rose 4.8 percent in the middle and dipped 0.8 percent in the top third.

“Even adjusting for changes in market mix, there’s growing evidence prices have crept up in areas where more demand has met a shrinking number of homes for sale. But we’re approaching the peak of the traditional spring-summer home-buying season. Whether these trends hold into the fall and winter isn’t clear. If they do, then logically the number of homes on the market would eventually rise to meet the demand. More owners will be interested in selling, knowing their homes are likely to fetch a higher price, and more people will shift from a negative to at least a slightly positive equity position, enabling them to sell. Home builders could rev up operations and lenders could push more distressed properties onto the market sooner. It would tame any price appreciation,” said John Walsh, DataQuick president.

In July, a total of 20,588 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was down 6.7 percent from 22,075 in June, and up 13.8 percent from 18,090 in July 2011.

Last month’s sales were 19.4 percent lower than the average sales tally of 25,545 for all the months of July since 1988, when DataQuick’s statistics begin. The low for July sales was 16,255 in 1995, while the high was 38,996 in July 2003.

The number of Southern California homes sold in July for less than $200,000 fell 5.8 percent from a year earlier, while the number that sold for $200,000 to $400,000 rose 13.4 percent. Sales between $300,000 and $800,000 – a range that would include many move-up buyers – increased 22.0 percent year-over-year. Sales over $800,000 rose 7.2 percent from July 2011.

Last month 22.5 percent of all Southland sales were for $500,000 or more, down from 23.1 percent in June and up from 20.7 percent a year earlier.

Distressed property sales – the combination of foreclosure resales and short sales – made up 39.7 percent of last month’s resale market. That was the lowest level since the figure was 36.0 percent in January 2008.

Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 21.0 percent of the Southland resale market last month, down from a revised 24.4 percent the month before and 32.6 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were 18.8 percent of the resale market in November 2007. In the current cycle, the figure hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.7 percent of Southland resales last month. That was up from an estimated 17.7 percent the month before and 17.4 percent a year earlier.

There were no signs of a major easing of credit conditions last month but the share of purchase loans in the “jumbo” category did inch up again, holding at its highest point since December 2007.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 20.2 percent of last month’s purchase lending, up from 20.0 percent the prior month and 17.8 percent a year ago. In the months leading up to the credit crisis that hit in August 2007, jumbos made up about 40 percent of the market.

The use of adjustable-rate mortgages (ARMs) slipped last month. ARMs made up 6.2 percent of home purchase loans in July, compared with 6.7 percent in June and 8.9 percent a year earlier. Since 2000, a monthly average of about 34 percent of Southland purchase loans were ARMs.

The most active lenders to Southland home buyers last month were Wells Fargo with 10.0 percent of the market, Bank of America with 2.9 percent and Prospect Mortgage with 2.7 percent. Combined market share for the top 10 lenders was 28.1 percent, down from 34.2 percent a year ago. Wells Fargo’s share of the market a year ago was 11.0 percent, Bank of America’s was 8.3 percent and Prospect Mortgage’s market share was 3.0 percent.

Absentee buyers – mostly investors and some second-home purchasers – bought 27.1 percent of the Southland homes sold last month. That was down from 27.3 percent the prior month and up from 23.9 percent a year earlier. The record was 29.9 percent in February this year, while the monthly average since 2000 is 17.3 percent. Last month’s absentee buyers paid a median $230,000, up 7.0 percent from a year earlier.

Buyers paying with cash accounted for 31.0 percent of July home sales, down from 32.3 percent the month before and up from 28.7 percent a year earlier. Cash purchases peaked at 33.7 percent of all sales this February, and since 2000 the monthly average is 14.9 percent. Cash buyers paid a median $235,000 last month, up 9.3 percent from a year ago.

Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 27.2 percent of all purchase mortgages last month. July’s FHA level was down from 27.8 percent the month before and 31.4 percent a year earlier. July’s FHA share was the lowest since August 2008, when it was 26.8 percent.

The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,106, compared with $1,102 the month before and $1,154 a year earlier. Adjusted for inflation, last month’s typical payment was 52.9 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 61.5 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity, while above long-term averages, has been trending downward this year and is far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.